byrn20250228

byrn20250228_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File No. 333-132456

Byrna Technologies Inc.
(Exact name of registrant as specified in its charter)

Delaware		71-1050654
(State or other jurisdiction of incorporation or		(I.R.S. Employer Identification No.)
organization)
100 Burtt Road, Suite 115
Andover, MA 01810
(Address of Principal Executive Offices, including zip code)

(978) 868-5011
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001, par value per share	BYRN	Nasdaq Capital Market

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of April 10, 2025, the Company had 22,667,235 outstanding shares of common stock.

TABLE OF CONTENTS

		Page

PART 1 – FINANCIAL INFORMATION		2

Item 1.	Condensed Consolidated Financial Statements	2

	Condensed Consolidated Balance Sheets as of February 28, 2025 (unaudited) and November 30, 2024	2

	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended February 28, 2025 and February 29, 2024 (unaudited)	3

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended February 28, 2025 and February 29, 2024 (unaudited)	4

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended February 28, 2025 and February 29, 2024 (unaudited)	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24

Item 4.	Controls and Procedures	24

PART II – OTHER INFORMATION		25

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 3.	Defaults Upon Senior Securities	25

Item 4.	Mine Safety Disclosures	25

Item 5.	Other Information	25

Item 6.	Exhibits	26

SIGNATURES		27

PART 1 – FINANCIAL INFORMATION

ITEM 1.

Condensed Consolidated Financial Statements

BYRNA TECHNOLOGIES INC.

Condensed Consolidated Balance Sheets

(Amounts in thousands, except share and per share data)

	*February 28,*			*November 30,*
	*2025*			*2024*
	*Unaudited*
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	7,669		$	16,829
Accounts receivable, net		2,900			2,630
Inventory, net		23,182			19,972
Prepaid expenses and other current assets		3,441			2,623
Marketable debt securities		11,620			8,904
Total current assets		48,812			50,958
LONG TERM ASSETS
Deposits for equipment		3,669			2,665
Right-of-use-asset, net		2,218			2,452
Property and equipment, net		4,651			3,408
Intangible assets, net		3,273			3,337
Goodwill		2,258			2,258
Deferred tax asset		5,468			5,837
Other assets		689			1,007
TOTAL ASSETS	$	71,038		$	71,922

LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	11,182		$	13,108
Operating lease liabilities, current		572			539
Deferred revenue, current		483			1,791
Total current liabilities		12,237			15,438
LONG TERM LIABILITIES
Deferred revenue, non-current		11			17
Operating lease liabilities, non-current		1,963			2,098
Total liabilities		14,211			17,553

COMMITMENTS AND CONTINGENCIES (NOTE 21)

STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued		—			—
Common stock, $0.001 par value, 50,000,000 shares authorized. 25,182,452 shares issued and 22,667,235 shares outstanding as of February 28, 2025, and 25,010,976 shares issued and 22,495,759 outstanding as of November 30, 2024		25			25
Additional paid-in capital		133,895			133,029
Treasury stock (2,515,217 shares purchased as of February 25, 2025 and November 30, 2024, respectively)		(21,253	)		(21,253	)
Accumulated deficit		(55,121	)		(56,783	)
Accumulated other comprehensive loss		(719	)		(649	)

Total Stockholders’ Equity		56,827			54,369

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	71,038		$	71,922

See accompanying notes to the unaudited condensed consolidated financial statements.

BYRNA TECHNOLOGIES INC.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Amounts in thousands except share and per share data)

(Unaudited)

	*For the Three Months Ended*
	*February 28,*			*February 29,*
	*2025*			*2024*
Net revenue	$	26,190		$	16,654
Cost of goods sold		10,266			7,015
Gross profit		15,924			9,639
Operating expenses		14,228			9,803
INCOME (LOSS) FROM OPERATIONS		1,696			(164	)
OTHER INCOME (EXPENSE)
Foreign currency transaction loss		(80	)		(58	)
Interest income		186			280
Loss from joint venture		-			(42	)
Other income		-			1
INCOME BEFORE INCOME TAXES		1,802			17
Income tax provision		(140	)		-
NET INCOME		1,662			17

Foreign exchange translation adjustment		(130	)		(115	)
Unrealized gain on marketable debt securities		60			-
COMPREHENSIVE INCOME (LOSS)	$	1,592		$	(98	)

Basic net income per share	$	0.07		$	0.00
Diluted net income per share	$	0.07		$	0.00

Weighted-average number of common shares outstanding - basic		22,587,099			22,035,249
Weighted-average number of common shares outstanding - diluted		24,098,635			22,838,827

See accompanying notes to the unaudited condensed consolidated financial statements.

BYRNA TECHNOLOGIES INC.

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

	*For the Three Months Ended*
	*February 28,*			*February 29,*
	*2025*			*2024*
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period	$	1,662		$	17
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Stock-based compensation expense		840			938
Depreciation and amortization		440			338
Amortization of debt issuance costs		—			4
Operating lease costs		234			117
Loss from joint venture		—			42
Deferred tax (benefit) provision		369			—
Changes in assets and liabilities:
Accounts receivable		(270	)		1,409
Deferred revenue		(1,315	)		731
Inventory		(3,210	)		1,762
Prepaid expenses and other current assets		(460	)		(263	)
Other assets		(40	)		—
Accounts payable and accrued liabilities		(1,925	)		(1,027	)
Operating lease liabilities		(102	)		(126	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(3,777	)		3,942

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(2,642	)		(171	)
Purchases of marketable debt securities		(2,656	)
NET CASH USED IN INVESTING ACTIVITIES		(5,298	)		(171	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock option exercises		93			10
Payment of taxes withheld on issuance of restricted stock units		(67	)		—
NET CASH PROVIDED BY FINANCING ACTIVITIES		26			10
Effects of foreign currency exchange rate changes		(111	)		(103	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FOR THE PERIOD		(9,160	)		3,678
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		16,829			20,498
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	7,669		$	24,176

See accompanying notes to the unaudited condensed consolidated financial statements.

BYRNA TECHNOLOGIES INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the Three Months Ended February 28, 2025 and February 29, 2024

(Amounts in thousands except share numbers)

(Unaudited)

					*Additional*			*Treasury*									*Accumulated Other*
	*Common Stock*				*Paid-in*			*Stock*						*Accumulated*			*Comprehensive*
	*Shares*		$		*Capital*			*Shares*			$			*Deficit*			*Loss*			*Total*
Balance, November 30, 2024		25,010,976	$	25	$	133,029			(2,515,217	)	$	(21,253	)	$	(56,783	)	$	(649	)	$	54,369
Stock-based compensation		—		—		840			—			—			—			—			840
Issuance of common stock pursuant to exercise of stock options		74,551		—		93			—			—			—			—			93
Issuance of common stock pursuant to vesting of restricted stock units		96,925		—		(67	)		—			—			—			—			(67	)
Net income		—		—		—			—			—			1,662			—			1,662
Unrealized gain on marketable securities		—		—		—			—			—			—			60			60
Foreign currency translation		—		—		—			—			—			—			(130	)		(130	)
Balance, February 28, 2025		25,182,452	$	25	$	133,895			(2,515,217	)	$	(21,253	)	$	(55,121	)	$	(719	)	$	56,827

Balance, November 30, 2023		24,168,014	$	24	$	130,426			(2,165,987	)	$	(17,500	)	$	(69,575	)	$	(1,056	)	$	42,319
Stock-based compensation		—		—		938			—			—			—			—			938
Issuance of common stock pursuant to exercise of stock options		167,967		—		10			—			—			—			—			10
Issuance of common stock pursuant to vesting of restricted stock units		39,773		—		—			—			—			—			—			—
Net income		—		—		—			—			—			17			—			17
Foreign currency translation		—		—		—			—			—			—			(115	)		(115	)
Balance, February 29, 2024		24,375,754	$	24	$	131,374			(2,165,987	)	$	(17,500	)	$	(69,558	)	$	(1,171	)	$	43,169

See accompanying notes to the unaudited condensed consolidated financial statements.

BYRNA TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

For the three months ended February 28, 2025 and February 29, 2024

1.	NATURE OF OPERATIONS

Byrna Technologies Inc. (the “Company” or “Byrna”) is a technology company, specializing in next generation alternatives to traditional firearms without the risk of taking a life. The Company's launchers can be used for self-defense and personal security by consumers in all 50 states without a firearms license, subject to local regulations. The Company also sells accessories, pepper sprays, and other personal safety tools. Most of the sales are to consumers in the United States via the Company's e-commerce site, its Amazon storefront, its four Company owned brick and mortar locations, and through retailers, including big box stores. The Company's products also may be sold to private security and public security officers. Since 2020, the Company has not manufactured or sold any products to or for use by the military. The Company operates two manufacturing facilities, a 30,000 square foot facility located in Fort Wayne, Indiana and a 20,000 square foot manufacturing facility located in Pretoria, South Africa.

2.	OPERATIONS AND MANAGEMENT PLANS

From inception to February 28, 2025, the Company has incurred an accumulated deficit of approximately $55.1 million. The Company has funded operations through the issuance of the Company's common stock par value $0.001 per share (“Common Stock”) until reaching profitability. The Company generated net income of $1.7 million for the three months ended February 28, 2025. The Company’s future success is dependent upon its ability to continue to raise sufficient capital or generate adequate revenues, to cover its ongoing operating expenses, and also to continue to develop and be able to profitably market its products.

3.	BASIS OF PRESENTATION

These unaudited condensed consolidated financial statements for the three months ended February 28, 2025 and February 29, 2024 include the accounts of the Company and its subsidiaries. These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles in the United States of America (“GAAP”); however, such information reflects all adjustments consisting solely of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. All significant intercompany accounts and transactions have been eliminated in consolidation.

The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto together with management’s discussion and analysis of financial condition and results of operations contained in the Company's annual report on Form 10-K for the year ended November 30, 2024. In the opinion of management, the accompanying unaudited condensed consolidated financial statements, the results of its operations for the three months ended February 28, 2025 and February 29, 2024, and its cash flows for the three months ended February 28, 2025 and February 29, 2024 are not necessarily indicative of results to be expected for the full year.

4.	USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Future events and their effects cannot be determined with certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and any such differences may be material to our condensed consolidated financial statements. Significant estimates include assumptions about stock-based compensation expense, valuation for deferred tax assets, incremental borrowing rate on leases, useful life of long-lived assets, inventory reserves, and allowance for credit losses.

5.	RECENT ACCOUNTING GUIDANCE

The Company considers the applicability and impact of all Accounting Standards Updates ("ASUs"). ASUs not discussed below were assessed and determined to be either not applicable or are expected to have minimal impact on the financial statements.

Accounting Pronouncements Issued but Not Adopted

The FASB also issued ASU 2023-07: Segment Reporting Topic 280 - Improvements to Reportable Segment Disclosures. This update requires expanded annual and interim disclosures for significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. This update will be effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, and is to be applied retrospectively to all periods presented in the financial statements. The Company believes the adoption of ASU 2023-07 will not have a material impact on the consolidated financial statements.

In 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update standardizes categories for the effective tax rate reconciliation, requires disaggregation of income taxes and additional income tax-related disclosures. This update is required to be effective for the Company for fiscal years beginning after December 15, 2024. The Company is evaluating the effect that ASU 2023-09 will have on its financial statements and disclosures.

In March 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (as clarified by ASU 2025-01). This guidance focuses on the disaggregation of income statement expenses. This update requires entities to provide more detailed disclosures about the components of significant expense categories, enhancing the transparency and decision-usefulness of financial statements. The objective is to provide users with a clearer understanding of the nature and variability of expenses reported in the income statement. The standard is effective for annual periods of fiscal years beginning after December 15, 2026, and interim periods in years beginning after December 15, 2027 with early adoption permitted. The Company is currently assessing the impact of ASU 2024-03 on our financial statement disclosures. While we anticipate that the adoption of this standard will require additional disclosures, we do not expect it to have a material impact on our financial position or results of operations.

6.	Goodwill

Goodwill resulting from a business combination is not amortized but is reviewed for impairment annually or more frequently when events or changes in circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company has the option to perform a qualitative assessment over goodwill when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit or to bypass the qualitative assessment in any period and proceed directly to performing the quantitative goodwill impairment test. If the Company concludes, based on the qualitative assessment, that the carrying value of a reporting unit would more likely than not exceed its fair value, a quantitative assessment is performed which is based upon a comparison of the reporting unit’s fair value to its carrying value. The fair values used in this evaluation are estimated by the Company based upon future discounted cash flow projections for the reporting unit. An impairment charge is recognized for any amount by which the carrying amount of goodwill exceeds its fair value.

The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. The Company’s operations constitute a single reporting unit and goodwill is assessed for impairment at the Company level as a whole.

7.	MARKETABLE DEBT SECURITIES

Marketable debt securities consist of U.S. Treasury Securities and Corporate Bonds. Management determines the appropriate classification of these securities at the time they are acquired and evaluates the appropriateness of such classifications at each balance sheet date. The Company classifies its investments as available-for-sale pursuant to ASC 320, Investments—Debt and Equity Securities. Investments are recorded at fair value, with unrealized gains and losses included as a component of accumulated other comprehensive income (loss) in stockholders’ equity and a component of total comprehensive loss in the consolidated statements of operations and comprehensive income (loss), until realized. Realized gains and losses are included in investment income on a specific-identification basis. The Company estimates expected credit losses for investments when unrealized losses exist. Unrealized losses that are credit related are recognized in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) and unrealized losses that are not credit related are recognized in accumulated other comprehensive income (loss). There were no realized gains or losses on investments for the months ended February 28, 2025. For the three months ended February 28, 2025, there were net unrealized gains on marketable debt securities of $0.1 million.

The following table summarizes our marketable securities and available-for-sale investments as of February 28, 2025 (in thousands):

	*Cost*		*Unrealized Gains*		*Unrealized Losses*		*Fair Value*		*Investments*
Corporate bonds	$	3,686	$	35	$	-	$	3,721	$	3,721
U.S. Treasury securities		7,836		63		-		7,899		7,899
Total	$	11,522	$	98	$	-	$	11,620	$	11,620

	February 28, 2025
	Cost		Fair Value
Due within one year or less	$	6,890	$	6,964
Due after one year through five years		4,632		4,656
	$	11,522	$	11,620

The following table summarizes our marketable securities and available-for-sale investments as of November 30, 2024 (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Investments
Corporate bonds	$	2,950	$	18	$	-	$	2,968	$	2,968
U.S. Treasury securities		5,889		47		-		5,936		5,936
Total	$	8,839	$	65	$	-	$	8,904	$	8,904

Fair Value Measurement

The Company follows a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

● Level 1- Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

● Level 2- Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

● Level 3- Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

The following table summarizes the fair value of marketable debt securities by level within the fair value hierarchy as of February 28, 2025:

					*February 28, 2025*
					*Fair Value Measurement Based on*
					*Quoted Prices in Active Market*		*Significant Other Observable Inputs*		*Significant Unobservable Inputs*
	*Cost*		*Fair Value*		*(Level 1)*		*(Level 2)*		*(Level 3)*
Cash equivalents	$	4,334	$	4,334	$	4,334	$	-	$	-
Corporate bonds		3,686		3,721		-		3,721		-
U.S. Treasury securities		7,836		7,899		-		7,899		-
Total	$	15,856	$	15,954	$	4,334	$	11,620	$	-

The following table summarizes the fair value of marketable debt securities by level within the fair value hierarchy as of November 30, 2024:

					*November 30, 2024*
					*Fair Value Measurement Based on*
					*Quoted Prices in Active Market*		*Significant Other Observable Inputs*		*Significant Unobservable Inputs*
	*Cost*		*Fair Value*		*(Level 1)*		*(Level 2)*		*(Level 3)*
Cash equivalents	$	11,304	$	11,304	$	11,304	$	-	$	-
Corporate bonds		2,950		2,968		-		2,968		-
U.S. Treasury securities		5,889		5,936		-		5,936		-
Total	$	20,143	$	20,208	$	11,304	$	8,904	$	-

8.	INVESTMENT IN JOINT VENTURE

In January 2023, the Company acquired a 51% ownership interest in Byrna LATAM, a corporate joint venture formed to expand the Company’s operations and presence in South American markets, for $0.5 million. The Company accounted for the investment in the joint venture using the equity method since the Company did not have voting control of Byrna LATAM. Additionally, the Company did not have substantive participating rights that would result in the Company having control of Byrna LATAM.

On August 19, 2024, the Company sold its 51% ownership interest to Fusady S.A. for $1 (the “LATAM Share Purchase Agreement”) and entered into an exclusive distribution, manufacturing and licensing agreement with Byrna LATAM (the “LATAM Licensing Agreement”). This LATAM Licensing Agreement allows Byrna LATAM to exclusively manufacture the Byrna SD launcher and ammunition in certain South American countries and requires Byrna LATAM to pay the Company a royalty on Byrna products manufactured. The amount of royalty earned during the three months ended February 28, 2025 and outstanding as of February 28, 2025 and November 30, 2024, was not material. The LATAM Share Purchase Agreement also includes put and call rights based on defined triggers which expire on August 19, 2029.

In January 2023, the Company loaned $1.6 million to Byrna LATAM. The loan bore interest at a rate equal to Secured Overnight Financing Rate ("SOFR") plus 3.0%. Interest income related to the loan receivable was less than $0.1 million and $0.1 million for the three months ended February 28, 2025 and February 29, 2024 respectively. The interest income is included in interest income in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). On August 19, 2024, the loan was amended to fix the loan amount at $1,431,112 plus accrued interest of $203,373 for a total loan amount of $1,634,485. The loan bears an annual rate of interest of 5% per annum. The loan will be repaid in twelve equal installments starting on August 19, 2025. The loan receivable was recorded as loan to joint venture in the Consolidated Balance Sheets until the consummation of the LATAM Share Purchase Agreement at which time the Company recorded the current portion of the loan as part of Prepaid expenses and other current assets and the non-current portion is recorded as part of the Other assets on the Condensed Consolidated Balance Sheet as of February 28, 2025 and November 30, 2024.

9.	ADVERTISING COSTS

Advertising costs are expensed as incurred and reported in Operating Expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), and include costs of advertising, tradeshows, and other activities designed to enhance demand for the Company's products. The Company recorded advertising costs of approximately $4.0 million for the three months ended February 28, 2025, and $2.8 million for the three months ended February 29, 2024.

10.

REVENUE, DEFERRED REVENUE AND ACCOUNTS RECEIVABLE

The Company generates most of its revenue through e-commerce portals to consumers, as well as wholesale distribution of its products and accessories to dealers/distributors and retail stores. The Company also sells products to large end-users such as private security companies and law enforcement agencies. The Company does not manufacture or sell any products regulated by the Bureau of Alcohol, Tobacco, Firearms and Explosives or for military applications. Revenue is recognized upon transfer of control of goods to the customer, which generally occurs when title to goods is passed and risk of loss transfers to the customer. Depending on the contract terms, transfer of control is upon shipment of goods to or upon the customer’s pick-up of the goods. Payment terms to customers other than e-commerce customers are generally 30-60 days for established customers, whereas new wholesale and large end-user customers have prepaid terms for their first order. The amount of revenue recognized is net of returns and discounts that the Company offers to its customers. Products purchased include a standard warranty that cannot be purchased separately. This allows customers to return defective products for repair or replacement within one year of sale. The Company also sells an extended warranty for the same terms over three years. The extended 3-year warranty can be purchased separately from the product and is classified as a service warranty. Since a warranty for the first year after sale is included and non-separable from all launcher purchases, the Company considers this extended warranty to represent a service obligation during the second and third years after sale. Therefore, the Company accumulates billings of these transactions on the balance sheet as deferred revenue, to be recognized on a straight-line basis during the second and third year after sale. The Company recognizes an estimated reserve based on its analysis of historical experience, and an evaluation of current market conditions.

The Company offers e-commerce customers a 14-day money-back guarantee, which allows for a full refund of the purchase price, excluding shipping charges, within 14 days from the date of delivery. The right of return creates a variable component to the transaction price and needs to be considered for any possible constraints. The Company estimates returns using the expected value method, as there will likely be a range of potential return amounts. The Company’s reserve for returns under the 14-day money back guarantee for the three months ended February 28, 2025 and February 29, 2024 was immaterial.

The Company does not offer a money-back guarantee to dealers or retailers. These customers may request a return or credit for unforeseen reasons or may have agreed discounts or allowances to be netted from amounts invoiced. Accordingly, the Company reserves for returns, discounts and allowances based on past performance and on agreement terms and reports revenue net of the estimated reserve. The Company's reserve for returns, discounts, and allowances for the three months ended February 28, 2025 and February 29, 2024 was immaterial.

The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. Shipping and handling costs associated with the distribution of finished products to customers, are recorded in operating expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and are recognized when the product is shipped to the customer.

Included as cost of goods sold are costs associated with the production and procurement of products, such as labor and overhead, inbound freight costs, manufacturing depreciation, purchasing and receiving costs, and inspection costs.

Accounts Receivable

The Company records accounts receivables due from dealers/distributers, large end-users such as retail stores, security companies, and law enforcement agencies. Accounts receivable, net of allowances, was $2.9 million, $2.6 million and $2.9 million as of February 28, 2025, November 30, 2024, and November 30, 2023, respectively.

Allowance for Expected Credit Losses

The Company estimates the balance of its allowance for expected credit losses. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status and makes judgments about the creditworthiness of customers based on ongoing credit evaluations. The Company also considers customer-specific information, current market conditions, and reasonable and supportable forecasts of future economic conditions. Account balances are written off against the allowance when it is determined that the receivable will not be recovered. As of February 28, 2025, November 30, 2024, and November 30, 2023, the total allowance for credit losses recorded was less than $0.1 million, $0.3 million and $0.6 million, respectively.

Deferred Revenue

The balance of deferred revenue, which relate to advance payments, unfulfilled e-commerce orders and amounts to be recognized under extended 3-year service warranty, as of February 28, 2025 and February 29, 2024 was $0.5 million and $2.7 million, respectively, and $1.8 million and $1.9 million as of November 30, 2024 and 2023, respectively.

	*February 28,*			*November 30,*
	*2025*			*2024*
Deferred revenue balance, beginning of period	$	1,808		$	1,936
Net additions to deferred revenue during the period		16,155			66,120
Reductions in deferred revenue for revenue recognized during the period		(17,469	)		(66,248	)
Deferred revenue balance, end of period		494			1,808
Less current portion		483			1,791
Deferred revenue, non-current	$	11		$	17

Revenue Disaggregation

The following table presents disaggregation of the Company’s revenue by distribution channel (in thousands):

	*Three Months Ended*
	*February 28,*		*February 29,*
*Distribution channel*	*2025*		*2024*
Wholesale (dealer/distributors)	$	6,029	$	3,553
E-commerce (direct to consumers)		20,161		13,101
Total	$	26,190	$	16,654

11.

INVENTORY

The following table summarizes inventory (in thousands):

	*February 28,*		*November 30,*
	*2025*		*2024*
Raw materials	$	10,872	$	10,307
Work in process		3,575		3,433
Finished goods		8,735		6,232
Total	$	23,182	$	19,972

12.

PROPERTY AND EQUIPMENT

The following table summarizes cost and accumulated depreciation (in thousands):

	*February 28,*		*November 30,*
	*2025*		*2024*
Computer equipment and software	$	804	$	791
Furniture and fixtures		340		276
Leasehold improvements		1,473		1,048
Machinery and equipment		5,201		4,095
		7,818		6,210
Less: accumulated depreciation		3,167		2,802
Total	$	4,651	$	3,408

The Company recognized $0.4 million and $0.2 million in depreciation expense during the three months ended February 28, 2025 and February 29, 2024, respectively. Depreciation expense is presented in the operating expenses and within cost of goods sold in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

At February 28, 2025 and November 30, 2024, the Company had deposits of $3.7 million and $2.7 million, respectively, with vendors primarily for supply of machinery (molds) and equipment where the vendors have not completed the supply of these assets and is presented as Deposits for equipment in the Condensed Consolidated Balance Sheets.

13.

INTANGIBLE ASSETS

The components of intangible assets were as follows (in thousands):

			*Balance at February 28, 2025*							*Balance at November 30, 2024*
	*Estimated Useful Lives in Years*		*Gross Carrying Amount*		*Accumulated Amortization*			*Net Carrying Amount*		*Gross Carrying Amount*		*Accumulated Amortization*			*Net Carrying Amount*
Patents		10-17	$	3,955	$	(1,042	)	$	2,913	$	3,955	$	(978	)	$	2,977
Trademarks	Indefinite			360		—			360		360		—			360
Customer List		2		70		(70	)		—		70		(70	)		—
Total			$	4,385	$	(1,112	)	$	3,273	$	4,385	$	(1,048	)	$	3,337

The trademarks have an indefinite life and are assessed annually for impairment. All other intangible assets are finite-lived.

Intangible assets amortization expenses are recorded within operating expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Total intangible assets amortization expense for the three months ended February 28, 2025 and February 29, 2024 were $0.1 million and $0.1 million, respectively.

Estimated future amortization expense related to intangible assets as of February 28, 2025 are as follows (in thousands):

Fiscal Year Ending November 30,
2025 (remaining nine months)	$	192
2026		257
2027		257
2028		257
2029		257
Thereafter		1,693
Total	$	2,913

14.

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The Company’s accounts payable and accrued liabilities consist of the following (in thousands):

	*February 28,*		*November 30,*
	*2025*		*2024*
Trade payables	$	8,272	$	7,715
Accrued sales and use tax		436		570
Accrued personnel costs		1,974		4,193
Accrued professional fees		322		124
Other accrued liabilities		178		506
Total	$	11,182	$	13,108

15.

STOCKHOLDERS' EQUITY

Stock Buyback Program

On July 31, 2024, the Company's Board of Directors approved a plan to buy back up to $10 million worth of shares of Common Stock (the “Stock Buyback Program”). The Company's Stock Buyback Plan is intended to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. The Stock Buyback Program will expire on the sooner of the two-year anniversary of its initiation or until the Company reaches the aggregate limit of $10 million for the repurchases under the program. The repurchased shares are recorded as part of treasury stock and

SEC Form 10-Q filed by Byrna Technologies Inc.